Weather: AVERAGE TEMPERATURES THROUGHOUT AS THE AVERAGE TEMP RISES.
We can look forward to milder weather, with the last of the sub-freezing cold fronts hopefully past. Unfortunately, the late start to warmer temperatures has kept heating demand high, adding to our supply woes that are the worst since at least 2018.
WHAT GOES UP MUST COME DOWN … AT LEAST TEMPORARILY
NATURAL GAS: PRODUCTION SHORTFALLS SEND PRICING HIGHER.
Natural Gas pricing is elevated through at least next April as Gas futures hover above $7.00 every month until March 2023, when it drops to $6.31 and then drops off sharply in April at $4.62. That drop-off assumes we do not have the same supply problems next year as we do this year.
Routine Spring maintenance combined with a blizzard in North Dakota resulted in lower production last week and higher pricing at the week’s end.
The blizzard knocked out 60% of oil production and 80% of Natural Gas Production in the Bakken Shale in North Dakota, lowering production by almost 2 Bcf/d over the next few days.
Low storage and a lack of capital to quickly pump into more drilling keep the market inflated with no relief before Winter 22-’23.
CONSTELLATION FORWARD POWER PRICING BGE HUB
CONSTELLATION FORWARD POWER PRICING AD HUB
AD HUB ELECTRICITY VS HENRY HUB
Concerns about storage for the upcoming winter drove pricing higher and into the $7.50 range this week. Lower production, higher demand, and increasing exports lead to our current situation.
NATURAL GAS: RUSSIA AND UKRAINE
The EU is moving closer to a Russian oil and gas embargo, with Germany even declaring they would support the embargo, which will likely come in the next two weeks. This could significantly increase the cost of oil and Natural Gas, even though Europe’s winter demand is slowing down.
